Intermediate Macroeconomics
Exam Practice Tests
Course Introduction
Intermediate Macroeconomics builds on the foundational concepts introduced in introductory economics courses, offering students a deeper understanding of the economy as a whole. The course covers topics such as national income determination, economic growth, business cycles, unemployment, inflation, and the effects of monetary and fiscal policies. Students will explore both classical and modern economic theories, including models such as IS-LM, AD-AS, and the Solow growth model, and apply these frameworks to analyze real-world economic issues and policy debates. Emphasis is placed on developing analytical skills through the use of mathematical models and empirical evidence, preparing students to evaluate complex macroeconomic phenomena and policy decisions.
Recommended Textbook
Macroeconomics 10th Edition by Stephen Slavin
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19 Chapters
5438 Verified Questions
5438 Flashcards
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Page 2
Chapter 1: A Brief Economic History of the United States
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Sample Questions
Q1) Which one of the following would be the most accurate description of our economy since the beginning of the new millennium?
A)We have had virtually no economic problems.
B)We are in the worst economic downturn since 1945.
C)Aside from the federal budget deficit,we have no major economic problems.
D)Our unemployment rates have been the lowest since World War II.
Answer: B
Q2) Inflation was the nation's number-one economic worry during
A)the 1920s.
B)1930s.
C)the late 1950s.
D)the early 1960s.
E)the 1970s.
Answer: E
Q3) Since the government has been paying out farm subsidies
A)the number of family farms has increased by about 40 percent.
B)the number of family farms has increased slightly.
C)the number of family farms has decreased slightly.
D)the number of family farms has decreased by 70 percent.
Answer: D
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Chapter 2: Resource Utilization
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Sample Questions
Q1) In 1943-1945
A)there was substantial unemployment in the U.S.
B)there was substantial excess plant and equipment in the U.S.
C)the U.S.had not yet completed its recovery from the depression.
D)we were temporarily operating at a point beyond our production possibilities frontier. The unemployment rate was at less than 2% from 1943-1945.
Answer: D
Q2) A political candidate promises voters more funding for AIDS research and child care and assures them they will not have to sacrifice any other goods or services to obtain the additional programs.
A)This may be possible if the economy has unemployed resources.
B)This is possible only in a fully employed economy.
C)This is possible if the economy is producing on its production possibilities curve.
D)None of the choices are possible.
Answer: A
Q3) Large firms are able to lower their costs by taking advantage of
Answer: economies of scale
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Chapter 3: The Mixed Economy
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Sample Questions
Q1) According to the circular flow diagram,in return for land,labor,capital and entrepreneurial ability,households receive ______________________________.
Answer: wages,salaries,interest,and profits
Q2) Which of the following is NOT an example of an externality?
A)The development of a vaccine for preventing flu.
B)Acid rain that destroys forest land throughout the Midwest.
C)Gas prices that doubled between 1998 and 1999.
D)A factory that dumps dangerous chemicals into the Hudson River.
Answer: C
Q3) Statement I: Nearly all economists prefer command-and-control to incentive-based regulations to curb pollution.
Statement II: Voting for a $4 per gallon tax on gasoline would be political suicide for most of our Representatives and Senators.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Answer: B
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Chapter 4: Supply and Demand
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Sample Questions
Q1) As price falls,quantity demanded ___________.
Q2) Statement I: The demand curve slopes downward to the right.
Statement II: The supply curve slopes upward to the right.
A)Statement I is true and Statement II is false.
B)Statement II is true and Statement I is false.
C)Both statements are true.
D)Both statements are false.
Q3) When market price is above the equilibrium level,it will _____;when price is below the equilibrium level it will _____;when price is at the equilibrium level it will _____.
Q4) When the market price is higher than the equilibrium price,there is
A)a surplus.
B)a shortage.
C)both a shortage and a surplus.
D)neither a shortage nor a surplus.
Q5) The supply curve slopes or curves _____.
Q6) _____ is the charging of "an unconscionable or exorbitant rate of interest."
Q7) If price were $170,there would be a _____ (shortage or surplus)of _____.
Q8) When quantity supplied is greater than quantity demanded,the price will _____.
Q9) If demand falls,what happens to equilibrium price and quantity?
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Chapter 5: The Household Consumption Sector
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Sample Questions
Q1) As disposable income grows,
A)both autonomous C and induced C rise.
B)both autonomous C and induced C fall.
C)autonomous C rises and induced C falls.
D)autonomous C falls and induced C rises.
E)autonomous C stays the same and induced C rises.
Q2) How much is saving?
Q3) Which statement is false?
A)Over the last two decades Americans have never saved over 11 percent of their disposable incomes.
B)A low savings rate leads to a low rate of productivity growth.
C)There has been a marked upward trend in our savings rate since the mid-1980s.
D)None of these statements are false.
Q4) How much is the marginal propensity to consume when disposable income rises from $600 billion to $800 billion?
A).5
B).65
C).75
D).85
E)Cannot be determined
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Chapter 6: The Business Investment Sector
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Sample Questions
Q1) When disposable income is $1,000,the APS is
A).05
B).10
C).25
D).50
Q2) When disposable income is $3 trillion,how much is savings?
Q3) During periods of time when a corporations is earning large returns,the increased value of the firm accrues to
A)common stockholders
B)bondholders
C)management
D)preferred stockholders
Q4) How much is its capitalization?
Q5) When disposable income is 1,000,C + I is
A)1,900.
B)400.
C)1,500.
D)500.
E)800.
Q6) How much is your marginal efficiency of capital?
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Chapter 7: The Government Sector
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Sample Questions
Q1) Which statement is false?
A)About seven percent of federal government spending goes toward interest on the national debt.
B)Over eighty percent of local taxes comes from property taxes.
C)The federal government will spend over $3.8 trillion this fiscal year.
D)None of these statements is false.
Q2) The federal tax on cigarettes is
A)direct and regressive.
B)direct and progressive.
C)indirect and regressive.
D)indirect and progressive.
Q3) The second largest source of federal revenue is
A)the individual income tax.
B)the corporate income tax.
C)the payroll tax.
D)sales and excise taxes.
Q4) Federal government spending was fairly constant for more than a decade until the year ____,when it rose sharply;then it rose sharply again in the year ____.
Q5) A tax of $1,000 per person would make the federal income tax more ____.
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Chapter 8: The Export-Import Sector
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Sample Questions
Q1) The relatively small export-import sector in the United States began to grow significantly
A)after 1900.
B)in the 1920s.
C)in the 1950s.
D)in the 1970s.
E)in the 1980s.
Q2) Specialization and exchange
A)creates benefits for both individuals and nations.
B)does NOT particularly benefit either individuals or nations.
C)can benefit individuals but not nations.
D)can benefit nations but not individuals.
Q3) Which statement is true?
A)Xn in the United States has been negative every year since the mid-1970s.
B)Xn in the United States was generally positive for most years from the 1920s until 1971.
C)Since the mid-1970s,GDP would have been higher without Xn.
D)All of the statements are true.
Q4) The big increase in the U.S.trade deficit in the mid-1970s was mainly due to
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Chapter 9: Gross Domestic Product
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Sample Questions
Q1) Which of the following is part of gross domestic product?
A)Value of homemakers' services in the home.
B)Purchase of a second-hand car from a neighbor.
C)Purchase of new stock from a recognized broker.
D)Purchase of a new textbook in the local bookstore.
E)Purchase of a corporate bond.
Q2) Real GDP is the
A)amount of goods and services available to each individual per period of time.
B)change in the number of goods and services produced over two periods of time.
C)value of the goods and services worn out in the production process during one year.
D)value of production of final output in one year after adjusting for changes in prices during the same perioD.
E)the value of goods and services produced as of a particular point in timE.
Q3) Which statement is true?
A)In recent years net exports have been negative.
B)Government spending is the largest sector of GDP.
C)Business investment is the largest sector of GDP.
D)None of the statements are true.
Q4) If our GDP fell and our output of goods and services fell,then our real GDP ___.
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Chapter 10: Economic Fluctuations, unemployment, and Inflation
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394 Flashcards
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Sample Questions
Q1) When we are at full employment
A)the unemployment rate is 0.
B)the cyclical unemployment rate is 0.
C)the structural unemployment rate is 0.
D)the frictional unemployment rate is 0.
Q2) If the nominal interest rate is 10% and prices generally increase 5%,the real rate of interest is
A)5%.
B)10%.
C)15%.
D)20%.
Q3) Disinflation occurs when
A)the rate of inflation rises.
B)the rate of inflation declines.
C)the price level declines.
D)the price level stays the same.
Q4) The _____ marks the low point of a business cycle.
Q5) Too many dollars chasing too few goods is a description of _____ inflation.
Q7) The prosperity phase of a three-phase cycle sets in after the _____ phase. Page 12
Q6) (a)In which year did disinflation begin? (b)In which year did deflation begin?
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Chapter 11: Classical and Keynesian Economics
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Sample Questions
Q1) The classicals said that recessions are _____ because the economy is ____.
Q2) The aggregate demand curve shows a(n)
A)positive relationship between prices and quantities.
B)inverse relationship between the price level and the aggregate quantity demanded.
C)independent relationship between the price level and the aggregate quantity demanded.
D)inverse relationship between the product price and the quantity of a good demandeD.
Q3) If aggregate production in the economy exceeds aggregate purchases
A)unintended inventory investment is positive.
B)inventories will be drawn down.
C)there is upward pressure on real GDP.
D)aggregate purchases will tend to increase until equilibrium is achieveD.
E)firms are selling more during the year than they are producing.
Q4) In the Keynesian theory,output and employment in the economy depend
A)directly on the level of total expenditures.
B)inversely on the quantity of resources available to it.
C)directly on the level of disposable income.
D)directly on the rate of interest.
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Chapter 12: Fiscal Policy and the National Debt
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Sample Questions
Q1) The federal budget deficit went over $100 billion for the first time in A)1977.
B)1979.
C)1982.
D)1984.
E)1986.
Q2) Suppose that I rose by $50 billion with a multiplier of 6.What happened to GDP?
Q3) Balancing the budget over the business cycle involves running _________ during recession years and _____ during economic booms.
Q4) The crowding-out effect of an expansionary fiscal policy is the result of government borrowing in the market which
A)increases interest rates and net investment spending in the economy.
B)increases interest rates and decreases net investment spending.
C)decreases interest rates and increases net investment spending.
D)decreases interest rates and net investment spending.
Q5) Since 1980,our national debt as a percentage of GDP has A)risen.
B)fallen.
C)stayed about the same.
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Chapter 13: Money and Banking
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Sample Questions
Q1) The transactions demand for money is most closely related to its job as a
Q2) Inflation impairs money's ability to do its job as a _____.
Q3) People tend to hold more money as
A)the price level rises and interest rates rise.
B)the price level falls and interest rates fall.
C)the price level rises and interest rates fall.
D)the price level falls and interest rates rise.
Q4) Which statement is false?
A)Most savings and loan associations were locked into low-interest-rate mortgages in the 1950s and 1960s.
B)To get a bank charter,you need to demonstrate that your community needs a bank or an additional bank.
C)Nearly all banks today are regulated by both the Federal Reserve and the FDIC.
D)The FDIC would rather pay off depositors than be forced to find another bank to take over an ailing institution.
E)Money is created when someone takes out a bank loan.
Q5) If M2 were 2,000,small denomination time deposits were 500,and large denomination time deposits were 300,how much would M3 be?
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Chapter 14: The Federal Reserve and Monetary Policy
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Sample Questions
Q1) Currently all checking deposits over 55.2 million in a bank are subject to a legal reserve requirement of _____%.
Q2) Statement I: The reserve requirement for demand deposits is higher than that for time deposits.
Statement II: The Fed is more effective in halting inflation than in ending a recession.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q3) Money is created when
A)Congress enacts legislation providing for increased bank reserves.
B)depository institutions make loans.
C)the Federal Reserve Board of Governors increases the discount rate.
D)Congress reduces taxes.
E)Congress increases spending.
Q4) An expansionary monetary policy tends to ________ our net exports.
Q5) The countries of ______ and _____ have a significant influence over changes in U.S.interest rates.
Q6) Our currency is issued by the _______________.
Page 17
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Chapter 15: A Century of Economic Theory
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Sample Questions
Q1) If V were 8,P = 4,and M = 700,how much would Q be?
Q2) An economist is most likely to favor discretionary aggregate demand policies,rather than a policy rule,if he or she is in which economic tradition?
A)Keynesian
B)Classical
C)Monetarist
D)Supply-side
E)Libertarian
Q3) The crude quantity theory of money assumes that
A)V and Q remain constant.
B)V and Q vary.
C)V is constant and Q varies.
D)Q is constant and V varies.
Q4) What was the dominant economic theory used to attempt to recover from the Great Recession?
A)Classical
B)Monetarist
C)Keynesian
D)Behaviorist
E)Supply side
Page 18
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Chapter 16: Economic Growth and Productivity
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Sample Questions
Q1) Statement I.Although more people than ever are attending college,our labor force is less educated than those of previous generations.
Statement II.Although the United States has less than 5 percent of the world's population,Americans have won about 60 percent of the Nobel prizes in economics,physics,and medicine.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q2) Each of the following has lowered our rate of economic growth except
A)immigration.
B)a low rate of productivity growth.
C)a low savings rate.
D)a declining educational system.
E)high interest rates.
Q3) Which statement is true about the Malthusian theory?
A)It predicts that famine can easily be averted.
B)It is an application of the law of diminishing returns.
C)It is unduly optimistiC.
D)It has proven true in most countries.
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Chapter 30: Income Distribution and Poverty
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Sample Questions
Q1) _________% of the people on welfare live below the poverty line.
Q2) Between 1960 and 1973 the poverty rate _____________;between 1973 and 1983 the poverty rate ________________.
A)rose;rose
B)fell;fell
C)rose;fell
D)fell;rose
Q3) Which statement is true?
A)The two Americans with the highest wealth are Bill Gates and Warren Buffett.
B)A total of 128 Americans earn at least $10 billion a year.
C)Although there are many millionaires in the U.S. ,there are no true billionaires.
D)The only American billionaire is Bill Gates.
Q4) If income were equally distributed,a nation's Lorenz curve would be identical to the _____________.
Q5) The typical welfare family consists of a ____________ and ____________ children.
Q6) In addition to wages,salaries,and property income,some people receive income from __________________.
Q7) How much is the percentage of income received by the middle three quintiles on line S?
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Chapter 31: International Trade
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Sample Questions
Q1) When net exports are negative,there is a trade __________.
Q2) In order of preference,economists would choose
A)quotas,tariffs,free trade.
B)free trade,tariffs,quotas.
C)tariffs,quotas,free trade.
D)free trade,quotas,tariffs.
E)tariffs,free trade,quotas.
Q3) A tariff can best be described as
A)an excise tax on an imported good.
B)a government payment to domestic producers to enable them to sell competitively in world markets.
C)an excise tax on an exported good.
D)a law that sets a limit upon the amount of a good that can be importeD.
Q4) Four main arguments have been made for trade protection: (1)the ______ argument; (2)the _______ argument; (3)the ________ argument;and (4)the ________ argument.
Q5) Kmart,Wal-Mart,and Toys 'r' Us import much their goods from __________.
Q6) A ______ is a tax on imports.
Q7) Portugal has a comparative advantage in which product?
Q8) A tariff on a good _________ its price.
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Chapter 32: International Finance
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Sample Questions
Q1) When a currency depreciates relative to other currencies as a result of government action,
A)it has appreciated.
B)it has been devalued.
C)it has been debased.
D)it has become worthless.
E)it has been subject to runaway inflation.
Q2) Suppose the exchange rate is initially set at 120 yen per dollar and increases to 140 yen per dollar.In the U.S.economy this would be expected to
A)increase the U.S.trade deficit (or decrease the trade surplus).
B)decrease the U.S.trade deficit (or increase the trade surplus).
C)increase the U.S.trade deficit only if exports change by more than imports.
D)leave the U.S.trade deficit unchangeD.
E)decrease the U.S.trade deficit only if exports change by more than imports.
Q3) In 2009,we had a current account ________ and a capital account ______.
A)surplus;surplus
B)deficit;deficit
C)deficit;surplus
D)surplus;deficit
Q4) Technically,our balance of payments always has a balance of _________.
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